Bethlehem Steel Reports Profit Of $180 Million

Best Of 1990s Company Reduces Debt, Contributes $110 Million To Pension Fund Liability.

February 01, 1996|by THOMAS KUPPER, The Morning Call

Bethlehem Steel Corp. yesterday reported annual profits for 1995 of $180 million, the best performance the company has managed in the '90s.

Company Chairman Curtis "Hank" Barnette said the outlook for this year is also good, though blizzards and flooding have hurt the company's East Coast operations in the first few weeks of the year.

"As we enter 1996, the U.S. economy appears to be on a course of moderate and sustainable growth and low inflation," Barnette said. "This, combined with a stronger global economy, should result in continuing good steel demand."

For the fourth quarter, Bethlehem reported profits of $32 million on sales of $1.2 billion, about the same as in the fourth quarter of 1994. The company had sales for the year of $4.9 billion, and the $180 million profit was more than double the 1994 result.

Bethlehem has not paid a dividend on common stock since 1992, and the board did not declare one at its meeting yesterday. The company's cash in the fourth quarter went to reduce debt and contribute $110 million toward the company's pension liability.

A dark note in the results was a $15 million fourth quarter loss in the company's steel-related operations, which include the BethForge and Centec divisions in the Bethlehem plant. The steel related operations lost over $40 million for the year.

Barnette said the implementation of the changes has been hampered by recent blizzards and flooding at Bethlehem's plant in Steelton, near Harrisburg. That plant supplies unfinished steel to the Bethlehem plant in the company's new configuration.

Steel President Roger Penny said he expected 1996 to be a better year for the "underperforming" operations, once the weather problems are overcome. He said the Bethlehem plant is in a "start-up mode" from the restructuring.

"The team out there, in addition to shoveling snow, has been working to get over some of the start-up issues," Penny said. "I think they're making good progress."

The flooding forced Steelton to shut down its steelmaking furnaces until Tuesday, and some areas of the plant were under four feet of water at one point, Barnette said. The weather also caused complications at the Bethlehem plant.

One steel analyst, Charles Bradford of UBS Securities in New York, said the flooding and declining prices could have a severe impact on the company's first quarter results. He forecast a drop in earnings to 5 cents a share, barely in black ink.

However, he said Bethlehem's results for the rest of the year could be among the strongest in the steel industry, in large part because of the restructuring. He forecast increasing annual earnings for Bethlehem, and declining earnings for most of its competitors.

"What differentiates Bethlehem from the rest of the group is the big cost savings they should get from the restructuring of the structural operation," Bradford said.